By Yuri Soares and Maria Teresa Villanueva
Mentoring is a tool that has the potential to help women entrepreneurs grow their businesses, and in some cases change their lives. Models of mentoring are more widely available than ever before. Modern approaches emphasize that women benefit from a wide array of mentors—not only experienced and successful women, but also male role models, peers, and even competitors. Mentoring is also increasingly conducted through dynamic platforms, often online or through social media, and is increasingly integrated as part of broader programs.
This week, the Multilateral Investment Fund launched a mentoring challenge to identify innovative mentoring models being applied in the industry. So we thought it would be a good time to reflect on what we know about how mentoring can be most helpful for women entrepreneurs, and how some of the most promising models can be scaled up.
The rigorous evidence on effective mentoring is actually very scarce. In two recent reviews of the business training and entrepreneurship literature, one by David McKenzie and Chris Woodruff, and the other by Mayra Buvinic and Rebecca Furst-Nichols, the authors find that remarkably little is known about the effectiveness of mentoring. McKenzie and Woodruff found no published papers on mentoring, and Buvinik and Furst-Nichols identify “networks of entrepreneurs” and “mentoring and role models for women” as two areas where more research is most needed.
McKenzie and Woordruff also find that merely teaching business skills is not enough. In most instances, stand-alone business training doesn’t impact business performance indicators, such as sales or profits. They also find that more intense approaches tend to produce better results. This is also what we found in a recent experiment with Mibanco in Peru, where Eduardo Nakasone and Maximo Torero show that short training can provide knowledge and change perceptions, but is insufficient to increase sales or growth.
Erica Field, Seema Jayachandran, Rohini Pande, and Natalia Rigol have one of the few papers that look at how women entrepreneurs can learn from mentors—in this case their peers. They find that when peers accompanied women entrepreneurs in training sessions, the sessions were more effective at changing behavior and boosting business performance. These women also seemed to apply their learning toward making their businesses more successful, for example, using business loans for business purposes rather than for general household purchases. This research is a good example of the type of innovative experiments that can help to inform program design.
We have also learned about the potential for mentoring through descriptive assessments of large-scale entrepreneurship programs that include mentoring as part of their design. For example, in Goldman Sachs’ 10,000 Women initiative, the descriptive program data shows large increases in both earnings and employment for participants. A MIF review of the 10,000 Women project in Peru, which the IDB jointly financed with Goldman Sachs, argues that part of this increase is likely due to the program. The results also show that women highly valued the mentoring component, and that as a result of the program, the participating women became mentors themselves, potentially expanding the program’s impact going forward.
While these types of women entrepreneurship programs are probably effective, they aren’t widely affordable. In Peru, the cost was roughly $3,400 per beneficiary. Part of the challenge of expanding mentoring from fragmented practices to larger-scale initiatives that can reach many women entrepreneurs is finding a balance between effectiveness and affordability. Whereas large-scale, short-duration, and low-cost training likely won’t move the needle on firm performance, very sophisticated and expensive programs will be unaffordable for most entrepreneurs and unpalatable for public policy.
There is ongoing work to look at the effectiveness of mentoring. In our case, we are running an experiment in partnership with the U.S. Agency for International Development. The four-year study is testing different combinations of individual and group training, as well as mentoring, for women entrepreneurs in Peru. These initiatives are fundamental for policy development, and should be expanded. We need to make sure that rigor and analysis keep up with the innovation in mentoring taking place in Latin America and the Caribbean.
We believe that this combination of innovation and learning is our best bet to scale up what works.